Top Dozen Reasons for Co-op Board Rejections
(And How to Avoid Them)

Before even beginning the hunt for that perfect co-op, the prospective buyer should be familiar with all the possible ways one's application might be rejected. That familiarity will enable one to focus on the appropriate buildings as well as to make the necessary adjustments so that rejection will not occur. It is also essential that one choose a broker who not only knows the criteria and delicate nature of the co-op boards to which one might apply, but is also capable of creating a fail-safe board package that will be one's passport to a new home. Since boards never reveal the reasons for rejecting a buyer, one must rely upon an experienced broker who understands the delicate nature of purchase applications and the variety of unpublicized reasons why rejections occur. Boards never specifically state reasons for rejecting a buyer, for by doing so, it could open itself to a lawsuit for discrimination. Here are a dozen of the most common reasons why prospective buyers are rejected by co-op boards.

1. Financials

A prospective buyer needs sufficient assets following a closing. Boards focus on the amount of liquid assets one has, and many of the premier buildings require one to have two to four times the value of the purchased apartment after closing. Other building boards may insist that one have two to three years of maintenance and mortgage payments in the bank. And, again, that should be the amount after all closing costs have been paid. A knowledgeable broker will not only be aware of each building's requirements, but will also keep abreast of those changing variables, for when new boards are elected every year, they often change the criteria for new buyers.

If a buyer's income is too low, that buyer may be rejected. The rule of thumb is that co-op boards generally want a buyer to be able to devote 25 percent of one's earnings to the payment of mortgage and maintenance. If those payments for one or more properties exceed more than 25 percent of one's gross annual income, one may very well be turned down.

2. Job History

Most co-op boards will ask to view not only a prospective buyer's earnings from employment, but all of one's job history. They will want a buyer who has demonstrated job stability, rather than someone who hops from job to job. It is not uncommon for prospective buyers who had sufficient assets to be turned down by boards simply because they changed jobs every few years.

3. Bad Credit

Although a prospective buyer may have a good income and plentiful assets, if that buyer has a poor credit history, including a negative track record of paying current maintenance fees or rent, then that prospective buyer will likely be a candidate for the board's rejection. A good broker will examine a client's financial history to make sure that there are no red flags that will invite a board's rejection.

4. Pied-a-Terre

Some boards are entirely amenable to having pied-a-terres. Others make decisions on a case-by-case basis. Still others do not allow them at all. If one is looking for a pied-a-terre, make sure that the broker has a clear understanding of the rules of prospective buildings.

Even if a building will consider the sale of an apartment as a pied-a-terre, the board may reject a part-time tenant who they feel might be spending too little time in the apartment. In such cases, the board may be concerned that the apartment could potentially be used as a hotel for friends and family. I know of a couple who attempted to purchase a small one-bedroom pied-a-terre; but because the couple had three teenage children, the board worried that the apartment was too small for a family of that size, and the children might use it for parties in their parents' absence. If the couple had been represented by a knowledgeable broker, they would not have had to waste time applying to a building that would ultimately reject them.

5. Guarantor

If one requires a guarantor, then one's broker should make sure that all prospective buildings are guarantor friendly. And since so many buildings annually change rules and bylaws, one's broker must be up-to-date on those changes. Even in buildings that permit guarantors, one should qualify the guarantor, for boards will require a couple years of tax returns as well as verification of income and assets.

6. Life Style

While many co-ops accept those who have high public profiles, there are others who do not want any undo attention brought to their buildings. There are still other buildings that do not want those who will disturb the peace, quiet and security of its shareholders. They may, for example, not sell to a paparazzi prone rock star who is known for a flamboyant lifestyle and hosting large, highly publicized parties into the wee hours.

7. Home Work

Most boards will not object to tenants working in their homes, as long as their occupations do not involve a revolving door of client traffic. A writer, for example, is acceptable, but a psychotherapist will most likely be rejected.

8. Failure to Fulfill Additional Requirements

Even after receiving a comprehensive board package from a purchaser, a board may require additional documentation for clarification or a preconditioned escrow deposit, or a change in one's mortgage product, prior to even granting an interview. If the buyer is unable or unwilling to accede to the supplementary demands, then the board will likely reject that buyer.

A fairly common requirement by boards is asking for one to three years of maintenance in escrow. If a board feels that a prospective buyer does not have sufficiently strong financials, the board may decide to approve a purchase, but only if the buyer agrees to the board's demand to put maintenance into an escrow account. After a tenant has a history of meeting financial responsibilities, the escrow account will be dissolved and the funds returned. If a purchaser does not agree to the maintenance escrow, that individual will be rejected.

Another example includes a purchaser who is unable to provide additional verification of projected income, which sometimes occurs when the buyer is self-employed. It may also occur when a buyer is simply unwilling to provide the requisite documentation for every asset. In both cases, a board may reject a buyer's application.

9. Low Purchase Prices

If a shareholder attempts to sell a co-op apartment at a below market price in order to facilitate a rapidly executed deal, the board will object, as such proposed deals diminish the value of all the apartments in the building. For example, I have seen a desperate seller accept an offer on his apartment that was 20 percent below the true market value. The board, of course, rejected the buyer since a greatly reduced price per share would negatively impact the share values of all the owners.

10. Pets

As in so many of the previous cases, this one also requires that a buyer's broker perform the necessary due diligence to learn which buildings are pet friendly. Even if a building permits dogs, a broker must learn if there are limitations on the number of dogs or breeds of dogs one might own. For example, numerous buildings do not permit more than two dogs per apartment and will not permit Pit Bulls, Mastiffs and Rotweillers. Still others will not permit dogs that weigh more than 50 pounds.

11. Noise

A board may reject a buyer, if that buyer has a profession or hobby that might entail making noise that will disturb other shareholders. For example, trumpet players, drummers, opera singers or tap dancers may all pose noise threats that will cause boards to reject their tenancy. And, if they are approved, their acceptance may be contingent upon sound-proofing their apartments, prior to taking possession.

12. A Poor Interview

A savvy broker will prepare a prospective buyer for the inevitable board interview. Not only should the buyer be on time for the interview and dress appropriately, but the buyer should not ask questions that might arouse concerns or suspicions on the part of even one board member. For example, one should never ask about subletting, or suggest that the building install a gym or a children's playroom. Rather, one should simply answer all questions succinctly and politely with a pleasant demeanor. In fact, the less said the better. Once a purchaser has been accepted by the board, has closed on the apartment and moved in, a shareholder may make as many suggestions to or ask as many questions of the board as desired. Now having become an owner, that shareholder is an exclusive co-op "club member" with the power to have a voice and a vote.

Carol Levy is president of Carol E. Levy Real Estate in New York City (www.carolelevy.com) and specializes in representing buyers and sellers of high-end co-ops and condos.

My coop nightmare has been going on for 16 months. In Sept my third buyer was rejected. For years I have had a problem with my downstairs neighbor who happens to be president of the board. I asked that he recuse himself from any decisions regarding my sale back when this started. Not only did he refuse to do so he had the coop attorney send me a letter forbidding me to communicate with any board member.
The third and most recent rejection was overturned by the board when I (and my attorney) served the board with notice that we were going to seek damages from each one personally if necessary.
In their reversal they demanded some that the buyers (a couple with a two year old child) comply with the floor covering requirements prior to closing. The buyers were insulted, disgusted, and put off. They terminated their contract. The board then sent me and the whole coop a letter saying they meant to say prior to occupancy. It was too little too late. I'm now left with trying to sell in the worst market in history. I moved out a year ago.
I have engaged the whole coop. Our building is angry at the board for several reasons including this one. It's a mess. What rights do I have as a shareholder? I have kept all documents relating to the dispute, the rejections, the reversal, and both of our respective attorneys emails acknowledging that this "looked and smelled" bad.
That said, my attorney still says I have no recourse but to wait until i sell and then sue for damages. I would appreciate some other input. One attorney I spoke to said he would be more interested if this was a million dollar apartment (it's in the $400,000 range).

in this day and age, it is puzzling to me that the board can reject people without any explanation. my friend was rejected and it is the most perplexing thing i have ever encoutered. her salary is good, a steady secure job, very smart, nice, good personality, but is it because she is black? i guess we will never know.

To Unknown User:
Your friend should call Skadden Arps to sue the board. They famously represented (on a pro bono basis) one of their black associates (who was married to a white woman) who got rejected by a coop board. Scott Musoff was the lead attorney.

i've been on two co-op boards. We recently rejected a buyer for financial reasons.. she was living on the cusp.. but the other board members noticed that she was wearing replacement finger nails that cost a fortune to maintain. Because that the prospective buyer did not use good judgment in using the little income she had, they rejected her. Interestingly, we did accept an earlier applicant for a less expensive co-op which had a lower income but presented herself in a more conservative fashion.

My husband and I are interested in a co-op. We are going to pay cash for our co-op, and are going to put three years worth of escrow toward our fees. My husband is retired and I have a lucrative grant writing business that I do from home. My business has no foot-traffic as I go to the agencies that employ my services. I do not feel it is any of their business how much money my husband and I have in the bank seeing as we are selling a $250,000.000 home to down size because both of children are graduated from college and have moved away. We are making this move so we can travel and not be tied down with maintenance or yard work, an dlike the security this co-op offers. Our broker feels this is not going to a problem becasue we are paying in cash, but i do not like the idea of 12 strangers being able to review our personal finances. I am very aware of identity theft in these times and feel we have a right to our privacy. If this is the case from all I have read, then my husband and I may look into other options. I could see the necessity of reviewing all these financial issues, if we were needing a mortage from the bank, but i feel we have the right to our privacy. Thanks.

For all those coop owners who have been help captive by a group of board members who have NO FINANCIAL loss by their decision, please take a look at this link. I am in the same position with you all and I am just as angry. This new office needs to make the Board financial accountable on a smaller scale especially when a board member is using their own inept decision making or personal gain against a private seller to hurt them. Good luck all. This is one of the worst makers to sell in and to have ANOTHER person make your financial decision for you should come to an end. The Peer Review need to come into effect. Take a look at he office by the attorney general.
A11452B-2009: Creates the office of the cooperative and condominium ombudsman; appropriation

since reading about the power a coop board has to over power the sellers decision to excepts someones offer is scary. For coop boards to determine who lives where is very discouraging for a perspective buyer.

I just went to a board interview, the way they ask you the question is like you are the one who is in jail. I dont see why the board interview is necessary if everything I have is qualify to the reqirement of the coop. I'm very upset the way they treated me. I spent my own money to get the coop. I don't understand why I've been treated like I'm begging for something free. Interestingly, they approved me but saying I were mean to them.

Now, the whole acceptance/rejection process may become a whole lot more transparent in the five boroughs. City Councilman Hiram Monserrate, D-Queens, has introduced a bill, known as Intro 119—“The Fair and Prompt Co-op Disclosure Law, “ or more commonly referred to as the written rejection bill—that would give co-op boards five days to give a rejected prospective buyer their reasons for the rejection. You can read the whole article in the cooperator- " Was it something I said"
Read this article. here is the link. Its about time!
go to cooperator "Was It Something I Said"

I think it must be very hard to get rid of a bad coop neighbor, which is why boards are so fussy. I can understand that they want the place kept quiet and do not want questionable people wandering through the building or threatening dogs. They certainly want to know that you have the money to staff such a place adequately.
It seems to me that most of their requirements have to do with things that, once you are a tenant, you would want as well.

We have a contract to sell our apartment to our next door neighbor in a coop. He was approved for his funding but was turned down by the Board even though he already owns an apartment in the building. Is the Board within its rights to do this?

Why would somebody want to live in one of these overpriced elitist dumps anyways when they could easily buy their own place or even rent a very luxurious apartment for the kind of money they would waste on a stupid co-op?
People sure do love wasting money, but then again its theirs to waste :-)

I need help! I am trying to sell my co-op and have reduced my price as it has not moved in 2 months. Many of the apts in Riverdale have reduced their price because of the market. Can the Co-op board reject the price because of the market if all the apts are reducing their price???

I got a coop interview that was 3 months after I submitted my application. The board is asking some other document to be supplied. I would not like this process going on and on forever. I heard that a coop board has the right NOT to make a decision at all. Is that true?

May I ask co-op board package held for over 3 months. Finally called for board interview-no one from the board showed up for the board interview. Still have not heard back from the board for a new date for board interview. Is this legal?What can seller or buyer do?

After reading all comments, first let me say I am not an Attorney but a Property Manager. I manage a few Co-ops- the Association has the right to deny applicants (as they are the "Landlord" of the property, owners own a stock (a percentage of shares). one of the responsibilities of Managing, is gathering all financial information from the prospective buyer/s to ensure you can afford the Common fees, regardless if this is a cash purchase. the Association has financial obligations to meet, on a monthly basis. if a buyer comes in and there is an assessment that puts the new owner in a paycheck to paycheck status, can end with a foreclosure. Once I gather all financial info (statements, 1040s, etc) I determine if it meets the Associations requirements based on an income/ household expense ratio, if acceptable, I forward to the board (only the credit report (blocking the SSN) which I conduct with their authorization, application etc. no finances get forwarded. I provide the Board with my recommendation, the Board simply meets the buyers, talks a bit and 9.5 out of 10 times gets approved (escrow is contingent at times, if they are border-line out of financial requirements)
I am not on here much, so may not be able to further comment immediately, however will be back. Hope this helps a little.

Can a Board deny a purchase because the purchaser and his wife have 4 children? It is a very large one bedroom converted to a 2 bedroom. There is a 14X15 foot large bedroom and an 9X11 foot small bedroom. Living Room/Dining Room combo and kitchen and bath.

I believe the Board is not authorized to make parents separate their kids creating non supported legally restrictions or limitations.
Family should have rights to decide if the conditions within the apartment are appropriate for the entire family since it does not affect anyone from shareholders.

There is a petition for a bill right that would require board members to state reasons for rejections. Concerned citizens have to sign petition and then will be present its case. You can sign through realestateboard of ny website or just research the bill yourself in nyc.gov

so I did everything required of me and submitted application and financials. 780 credit score and NO delinquencies. Denied without ever speaking a word to anybody on the board and no request for interview. And when asked why by my attorney the response was "we don't need to give you a reason" I'm disgusted, angry and disappointed. it seems unfair that such a decision would be made with nary a question or a comment my way.

I am shareholder in Co-op In New York and I had 3 buyers denied. Co-op would not give me a reason and I guess they don't have to, but being shareholder (just like them) I have the right to know why. I believe that my buyers were qualified. If all three were not why interview them in the first place. The Board of Directors reviewed their financials beforehand why waste their time, buyers time and my time and money paying the maintenace fee. Also, I read that NY Court ruled that a coop Board cannot set a minimum amount that a seller can sell his/hers apartment but it seems that in a lot of articles I read, the coops reject potential buyers because of too low of selling price Isn't this breaking the law-- Bd of Directors should be accountable for this. They need to be investigated. I want The Attorney Generals office to get invovle and the FHA also. Coop's Board have too much power over the seller and buyer and many times thieir actions are unfair and descriminatory. Nobody is helping Seller from Board of Directors who are unreasonable..

I have been figthing with Directors of Kingsview Board in Brooklyn N.Y trying to sell property and they continue to decline offers. While the keep declining the maintenance fees keeps incresing. I dont know what to do and I am in desperate need of some expert help.

I m trying to sell my apt. T e association refuse because one of the Buyers has bad credit and low income. But the co buyer have a strong income,strong credit. They says that they allow to buy just the strong buyer,the weak can't be in the purchase,and if the strong one buy himself,dont allow the weak one to llive in the building,because if she live herself is considering as a rent,and in these building youn can't rent after you buying for the period of one year,and the board says that the strong one coul pass the title to the weak one. But that not the case,the weak one have to pay for these apartment to the stong one.The association can't stop a sale after a people fulfill the request. What can I do,what the law says in these case,Im stock right now!!

My father, who is 95, has a buyer for his apartment, wants to move to assisted living. However, the coop board has been dragging out the process for months now. If a person can prove that he needs to sell his apartment because he needs care, is there any way to expedite the process?

This is all proof that you can't trust your neighbors to manage the buildings you all live in. When people can control who they neighbors are or are not with next to no recourse to correct wrong doings, things go awry. Laws need to be passed that will force Co-Ops into submission and give power back to the shareholder and potential buyers. DO NOT beg people to take your money - no apartment building is worth it!

my mom is desperately trying to sell her co-op for 2ys. she need the money to surive!!! the board has turned her down twice without ever interviewing prospective buyers. they both have met all criteria what do I do next. really pissed. any suggestions111

I am currently trying to sell my co-op and dealing with a board who declines my buyers. I feel like I have no rights and no one to appeal to. This seems like a big enough problem to contact News Watchdogs to investigate some of these incompetent Boards. Has anyone heard of that being done?

The co-op I have bought into has a screening committee, which reviews financials, tax returns, background checks, references (which are actually called). The "screening committee" gives the thumbs up or down, not the Board. The screening committee is appointed, not elected, and some are there for years as it is an over 55 bldg. Is this legal that the Board does not have the final responsibility, but a committee of your neighbors

I've lived in my Fleetwood coop for 22 years and am happy with our board. A good board represents everyon's interest. As for who may moves in, I want them to investigate their finances, meet a buyer to get a good idea of the new neighbor. Is their personal appearance neat, clean, respectable? You want have clean neighbors. If not, think of how a roach problem would make you feel. I don't know if rejecting a buyer because they appear dirty is legal to say or put in writing. As to selling price, if your neighbor sells to low, guess what happens when you want to sell-agents pull up comps and tells your potential buyer the unit next door sold for 20k less forcing you to reduce your price--whether house or coop. So selling price not only affects seller but all owners. I think you'd want to get the highest market value when selling so benefit to all. I know there are extrems but my experience has been positive. Property managers handle your complaints if there are any, mant times leaving your name out of it. It is very important that you get to know your board too, they can be your friendly advocate. Attend board meetings. As far a renting, there should be a small percentage allowed. Sometimes you get renters that don't take care of property and owners pay through maintenance fees for these damaged public spaces.

Co-ops are corporations. You own shares that give you a right to live there. If someone comes to interview and shows discomfort with our latino, gay and lesbian, biracial families, we'd rather not have them around. Will they be frightened of the neighbor's large dog? Object to elderly folks who may be slow? Inconsiderate in terms of noise? These are the reasons for interview. Will you have a fit when the passenger elevators are down for service and you have to use a freight elevator? How about when a neighbor burns dinner and it smells. Will you complain or offer them a seat at your table? If we don't think you have enough money to live, to pay unexpected medical bills, to handle an unexpected pregnancy or a kid moving home from college, we don't think you'll be able to keep up your share of the financial obligations. The contract tells you how long the board can hold onto your documents, SS#'s are blocked, as are acct numbers after the credit check. If not, don't buy there anyway as mgmt company isn't doing a good job. None of this should be as bad as you think if you're a reasonable careful buyer. Tell your realtor that you'll only look at buildings that are careful. No board member wants to be sued, even with D&O insurance, because your personal information was hacked after you used a credit card and home depot and were hacked.

OMG, so glad Pittsburgh has very few co-ops they seem awful. Approving people in your building by how they interview. I would not like to live anywhere that people could refuse you for no legitimate reason. Don't buy

I was trying to buy an apartment since April2014
and was interviewed on september.board aproved and ready for closing.now they said my aplicacion was denied and no more explanation. .it is not fair. ..loose time and money and braked feelings...

I found out today after 3 months that I was rejected with no reason given or even an interview. This is legal is crazy. You're damn right I'm going to look into the NY law demanding coop boards to give reasons.

Co Ops Need to answer to Shareholders.
I have a Board in Great Neck NY which I am in the process of starting a suit against them for many reasons.. they harass interfere with my day to day peace. its harassment, emotional distress and they will be sued!! More and more abused shareholders need to do this ASAP also serve the managing agent!
Once they start paying out it Will Stop!

I think the laws should be changed. These people have too much power and do not have to explain themselves. My husband and I are waiting on a co-op (which we put the down payment for already) and did all the paperwork for. We both have jobs, great credit, savings in the bank and still we are being rejected. Why dont we get a reason? Its ridiculous.

It has been more than three weeks since the coop board disapproved my boyfriend and I and we are still waiting for our $10,000.00 down payment. It was overnight the sellers lawyers deposit it into the sellers escrow account. Why does it take so long for it to be returned? Not only does our lawyer not return our phone calls, but has us waiting to hear from the sellers lawyers. What is wrong with this picture?

the funniest part about all these comments are the people crying boo hoo over being rejected. newsflash: this co-op board bs is a popularity contest. if you don't like being in high school all over again, walk away. i laugh at people who want to beg other people to buy something. this is pathetic ridiculous and hilarious at the same time. also, people die and lose jobs all the time. just because you are a great candidate today doesn't mean you will be tomorrow. disease, death, job loss, accidents, etc. can completely change your life in one second, literally. but really guys, come on now. if you applied to a co-op board, you accepted the treatment you were going to get. it's like me asking someone if i can please buy an apple and then paying for it. awful.

I am wondering if anyone from the board can give us some advice. We own a co-op in NYC. We have moved out since January 2005. We put it on the market since April 2014. Our first buyer got turned down with two reasons: the official one - the board suspected the motive of buying is for subletting; and the behind-the-scene one, he is Burmese (heard from a person closed to the president of the board). It usually takes the board within two weeks to deliver the votes, but it took nearly 4 weeks after we pushed it really hard to find out the rejection. Our second buyer 100% is qualified financially. But he speaks little English, but a decent and hard working middle-class man, who wants to buy it as retirement home. After sending his application for over a month and missing a board meeting because the management didn't send it to the board directors in time, finally he got the interview and his daughter was the translator during the process. I called the president of the board one day before the interview for my broker told me nothing had been arranged yet for the interview. The president said she never got the package over the phone, which was totally a lie because one of board directors told us she did receive. We begged her to arrange the interview for the next day, she said she would check if she has the application first (sounds funny?). She has a history of saying getting back to you, but never did. I wasn't sure whether she would do it (I don't trust her at all, long story). I contacted the management the next morning. More lies and coming back and forth, finally it got arranged. The interview went well according to our buyer. This time the votes come back quick, two days, and we learned he got turned down for no reason. There are 5 people in the board, 4 on one side including the president and 1 one on other. I suspect this has something to do with we did not vote for the president last year. She always had that weird look on us ever since she learned we didn't vote for her. But we have no physical proof she is holding a grudge on us. We tried to find out the reason why our buyer got turned down, the management said board didn't say. I tried to call the president, she either didn't pick up the phone or pretended she was not home. We are very frustrated at this moment. Our attorney wouldn't write a strong letter for us for she said we don't have enough to build up a case. I told her I am not trying to do so. But I think a letter from her has more power to make the board to re-consider. She only agrees to write a letter to find the reason for rejection. Sorry for the long post. Maybe someone has similar experience who can shed a light on our case. Thank you!

Our Co-op is owner-occupied according to our Rules. Two middle-aged sisters are owners, but don't occupy the apartment. It is a one-bedroom apartment. It's not a 55+ apartment building. One of the sisters is having one of her daughter occupy the apartment with two kids about 8 and 6 year old. Our Bylaws say that no children under 12 years old can live there. She was never accepted by the Board but she moved in anyways. She claims that we cannot refuse her because the federal law says we cannot reject her for her children. It is a C- shape building with 22 units, 11 units on 2 separate floors. The tranquility of the other owners is disturbed by the shouts and cries of the children. Can the Board evict her as the building is not a place for young children not having any commodity for children. Most people here are older and retired and the apartments are mostly occupied by singles or couples. What can the Board do? Thank you!

When you buy in co-op you should talk to the broker who will guid you through the process and make sure that your board package will present you in the best way possible. Ofcourse your financials and credit history has to be good enough for the co-op. With that said, all co-iOS are different but a good brokers can identify how strict co-op is. There is no 100% guarantee even in you financially qualified. You have to pass the board interview as well.